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Home My WebLink About905202 RECEIVED 12/13/2004 at 1:36 PM RECEIVING # 905202 BOOK: 574 PAGE: 593 JEANNE WAGNER LINCOLN COUNTY CLERK, KEMMERER, WY ASSIGNMENT OF PRODUCTION PAYMENT 0593 THIS ASSIGNMENT OF PRODUCTION PAYMENT (the "Assignment") is from Merit Partners, L.P., a Delaware limited partnership ("Assignor") whose address is 13727 Noel Road, Suite 500, Dallas, Texas 75240, to Merit Energy Partners B, L.P., a Delaware limited partnership ("Assignee") whose address is 13727 Noel Road, Suite 500, Dallas, Texas 75240. WITNESSETH: I. Conveyance 1.1 Assignor, for and in consideration of One Hundred Dollars ($100.00) and other good and valuable consideration, receipt of which is hereby acknowledged, and subject to the conditions and reservations herein set forth, hereby ASSIGNS, TRANSFERS, GRANTS and CONVEYS, effective as of 7:00 a.m., local time, on July 1, 2002 (the "Effective Time"), unto Assignee, a production payment which may equal but not exceed in the aggregate seventy percent (70%) of all the following interests (the "Specified Interests"): that portion of the oil, gas and other minerals in and under and which may be produced from (or otherwise attributable to) the interests assigned to Assignee pursuant to that certain master Assignment of Net Profits Interests dated effective as of July 1, 2002 (the "Net Profits Assignment") recorded in the locations shown on Exhibit A hereto, free of all exploration, development and operating costs but subject to (i) applicable taxes measured by production or value, including gross production, severance and other taxes, and (ii) all presently valid and subsisting overriding royalties, production payments and similar burdens which were of record and burden the Specified Interests on the effective date of the acquisition of each Specified Interest by Assignor (other than the net profits interests created by the Net Profits Assignment, such Assignment being recorded in the jurisdictions set forth on Exhibit A hereto and at the volumes and pages set fodh on such Exhibit A); provided, that the payments made pursuant hereto to Assignee for any particular month with respect to each increase in the Payment Amount (as herein defined) shall not exceed the aggregate sum of (i) one-twelfth (1/12th) of each such increase amount divided by seven (7) plus (ii) an amount equivalent to interest accrued on the Payment Amount outstanding from time to time during such month at the Fluctuating Rate (as herein defined) plus (iii) the aggregate amount, if any, by which the aggregate of all prior payments attributable to clause (i) preceding was less than the aggregate maximum payments that were permissible under clause (i) (MEP _B - AGG 16 -- Devon) · 0594 preceding. All payments made on account of a production payment shall be computed on the basis of Gross Proceeds, as defined in that certain Net Profits Agreement dated June 12, 1998 by and between Assignor and Assignee (the "NPI Agreement"). The pr. oduction payment granted hereby has a "Payment Amount" that will fluctuate from time to time and that will be adjusted each year prior to the termination hereof in accordance with the NPI Agreement and this Assignment. The "Payment Amount" will increase upon the Effective Time by an initial amount permitted pursuant to the NPI Agreement and thereafter will increase each year, if at all, by the amount permitted pursuant to the NPI Agreement, and will decrease each time a payment is made pursuant hereto (other than payments for the equivalent interest factor described in section 1.1 (ii) above). The term "Fluctuating Rate" shall mean a rate per annum of one percent (1%) plus the "reference rate of interest" established from time to time by Bank of America National Trust and Savings Association (or any successor) (the "Bank"), with each change in the interest rate applicable hereunder to be coincident with each change in the reference rate of interest announced from time to time by the Bank. The production payment assigned hereby shall terminate upon the earlier of (i) the recording by Assignee and Assignor of (a) an instrument expressly terminating this Assignment, or (b) as it affects a particular asset, an instrument conveying or unifying Assignor and Assignee's interests in such asset, and (ii) at such time as the remaining commercially recoverable reserves in and under the land from which the production payment is conveyed shall be reduced to 15% of the total commercially recoverable reserves in place as of the date of this assignment. All amounts received by Assignee shall first be credited to accrued interest and then to the reduction of the Payment Amount. At the time of termination, Assignee shall execute an instrument in writing, verifying such termination as a matter of record. The term "commercially recoverable reServes" is defined herein to mean the total commercially recoverable oil and gas in place and attributable to the Specified Interests in and under the land from which the production payment is payable from all productive zones taking into account all methods of prOdUction, including, without limitation primary, secondary and tertiary recovery methods. All determinations as to the remaining commercially recoverable reserves and as to the commercially recoverable reserves in place as of the date of this assignment shall be made, from time to time, by mutual agreement of the parties, but if they cannot agree, by an independent petroleum engineer or engineering firm selected by mutual agreement; if the parties cannot agree upon such an engineer or firm, then either party may in writing request the Chief Judge of the United States District Court for the Northern District of Texas to appoint a petroleum engineer to make such determination, which appointment shall be made without any necessity for notice or hearing. The cost of engineering services shall be borne equally by the parties. Such determination shall be binding upon the parties. I-I'[~..~r~I~WPR~PRCInPMT~t4~Prr~I Pm! I~rm rl~ 2 (MEP _B - AGG 16 -- Devon) (..059,5 1.2 Assignee agrees that the production payment herein conveyed is subject to the terms and conditions of the oil, gas and mineral leases described in the Net Profits Assignment and all instruments (other than the Net Profits Assignment) burdening or affecting the leases recorded in the proper public records of the jurisdictions in which such leases are located; the production payment herein conveyed is senior in priority of payment to and not burdened by the Net Profits Assignment. No loss or failure of any such lease or instrument shall serve to reduce the Payment Amount. The reference herein to such terms and conditions is for the purpose of protecting Assignor and Assignee and shall not create nor constitute recognition of, any rights in third parties. 1.3 Assignor expressly denies any warranty, whether express, implied or statutory, with respect to the Specified Interests, and except for the special warranty set forth in the next succeeding sentence, this Assignment is executed and delivered without any warranties of title, whether express, implied or statutory. TO HAVE AND TO HOLD the production payment herein assigned unto Assignee, its successors and assigns, until termination as herein provided; and Assignor hereby binds itself, its successors and assigns, to WARRANT and FOREVER DEFEND the production payment against every person whomsoever lawfully claiming or to claim the same or any part thereof by, through or under Assignor, but not otherwise. Assignor further gives and grants unto Assignee, insofar as it affects the production payment, full power and right of substitution and subrogation in and to all covenants and warranties by others heretofore given or made in respect of the Specified Interests. II. Miscellaneous 2.1 Assignor will do, execute, acknowledge and deliver all and every such further acts and such other instruments as may be necessary or appropriate more fully to assure to Assignee, its successors and assigns all of the properties, rights, title, interests, estates, remedies, powers and privileges by this instrument transferred, assigned and conveyed or intended so to be. 2'.2 All of the terms, provisions, covenants and agreements herein contained shall extend to and be binding upon the parties hereto, their respective successors and assigns. (Signature Page Follows) ~-I-~P.=rnI~WpfiI1xPRrlrlPblTI1J~Pr~I Prat Fnrrn rlr~n 3 (MEP _B - AGG 16 -- Devon) IN WITNESS; WHEREOF, Assignor has caused this Assignment to be executed on -FebrUaT~_~_~2004. ASSIGNOR: MERIT PARTNERS, L.P. By: Merit Energy Company, General Partner By: Fred N. D~em, V~ce President ASSIGNEE: MERIT ENERGY PARTNERS B, L.P. By: Merit Partners, L.P., General Partner By: Merit Energy Company, General.]~a, dner THE STATE OF TEXAS COUNTY OF DALLAS ~ This instrument was acknowledged before me on the ~ ~'('~day of ~,/,b~ 2004, by Fred N. Diem, Vice President of MERIT ENERGY COMPANY, a Delaware corporation, on behalf of said corporation, as General Partner of Merit Partners, L.P., a Delaware limited partnershiP, which is the General Partner of Merit Energy Partners B, L,P, W, MERCER · ' t~ 1~,, ,~ ~........,.',~ °,o ~-~,,-/~, ,~;t. ROSALIND ~ ~.(~;~ Nota~ Public, State of Texas ~ '{~¢~,,' My Commission Expir~ 08-2g-06 N~)t~ry Public, State of Texas My .commission expires: H't~=rrd~WDRIl~PRClrlPMTI14~Prnrl Pml Fn~n ~ (MEP _B - AGG 16 - Devon) 4 EXHIBIT ASSIGNEE STATE CO UNTY BOOK PAGE (Or Other Recording Information) Merit Energy Partners, B, L.P. CO K. iowa 437 182-195 KS Barton 609 319 KS Ellis 575 746 KS ?inney 257 409 KS Graham 207 581-594 KS 1 larper 37M 358 KS K ingman 0-11 37 KS Rooks 331 245 KS Seward 557 646 KS Stafford 173 446 LA £'ameron Book No. 975 Doc. No. 283135 LA .(_?ncordia 403 I a36 LA lberia Book No. 1269 Doc. No. 03-14775 LA l~laquemines 1056 713 LA St. Mary 46-F 433 LA Tensas 64 697 LA Tcrrebonne Book No. 1840 Doc. No. 1162303 LA Vermilion Doc. No. 20314890 MS Jefferson 109 303 MS l~owndes 203 3241- 3254 MS Rankin L197 394 MS Wayne 1057 234-247 MS Yazoo 299A 655 ND HcKenzie Doc. No. 346056 Merit Energy Partners B, L.P. - Page I ASSIGNEE STATE CO UNTY BOOK PAGE (Or Other Recording Information) NM NM OK OK OK OK OK OK OK OK TX' TX TX TX TX TX TX- TX " TX TX TX TX TX TX TX TX TX TX Eddy 523 754 Lea 1254 494 Beaver 1106 366-379 P, cckham 1789 175 I31aine 879 342 Ellis 683 523-36 Grady 3538 113 l larper 587 113 l,e Flore 1481 712 ~,oger Mills 1723 508 Andrews 814 319 Brazos 5716 273 Chambers 662 187 Cochran 260 533 Crane 452 743 Crockett 629 429 l)awson 528 65 Ector 1795 713 Edwards 218 536 Gaines 787 138 Garza 268 214 (~lasscock 73 109 l [ockley 728 632 [rion 151 521 l,ipscomb 414 510 Lubbock 8777 195 Martin 143 423 x, latagorda Doc. No. 037905 Merit Energy Partners B, L.P. - Page 2 0905;8028 ASSIGNEE STATE CO UNTY BOOK PAGE (Or Other Recording Information) TX TX TX TX TX TX TX TX TX TX WY WY WY WY vlidland 2269 665 )chiltree 621 755 l'ecos 747 490 Reagan 54 103 Roberts 155 399 chleicher 437 858 Sutton 328 15 'Ferry 696 480 Upton 737 588 Zapata 699 1-14 'ampbell 1919 57-70 /onverse 1222 820 Lincoln 538 71 vcetwater 986 816 Uinta 809 606-619 ~k Merit Energy Padners B, L.P. - Page 3